COMMISSIONER OF INCOME TAX Vs. SHRADA TALKIES

JUDGEMENT

(1.) THIS reference relates to the asst. yrs. 1967-68, 1968-69 and 1969-70. The accounting period for these years ended respectively on 31st August, 1966, 31st August, 1967, and 31st August, 1968. The questions that arise for our decision are as follows :

(2.) THE assessee carried on the business of exhibiting cinema films. To begin with, the business was carried on in three cinemas. Jairam Talkies is one of the cinemas in which the business of exhibition of films was carried on. THE possession of Jairam Talkies was delivered by the assessee to the owner on 2nd October, 1964. THE owner filed a suit for recovery of damages for the period from 22nd May, 1960, to 4th October, 1964. THE case of the assessee is that in defending the suit he had to incur expenditure of Rs. 1,050 in the account period relevant to the asst. yr. 1967-68, Rs. 4,599 in the account period relevant to the asst. yr. 1968-69 and Rs. 890 in the account period relevant to the asst. yr. 1969-70. Further, in pursuance of the decree passed in that suit, the assessee had to pay Rs. 30,000 in the account period relevant to the asst. yr. 1969-70. THEse amounts have been allowed by the Tribunal as business expenditure under s. 37 of the IT Act, in computing the total income for the aforesaid years.